Portland officials are considering the creation of a locally funded program that could provide property tax relief to low-income and elderly residents.

The idea, which is on the City Council’s agenda for Monday, comes after the Maine Legislature’s vote last year to eliminate the $43 million circuit-breaker tax-relief program and replace it with a $28 million Property Tax Fairness Program that provides smaller tax rebates to fewer taxpayers. The change reduced the maximum tax rebate available to homeowners from $1,600 to $400, and lowered qualifying income levels from roughly $60,000 for individuals and $80,000 for families to $40,000 per household.

While Portland may move to supplement the state’s tax relief program, South Portland and other communities that already have local tax relief programs will have to re-evaluate their programs in light of the changes at the state level.

At least seven Maine communities have a local property tax relief program, and most of those programs were based on the now-defunct state circuit-breaker program, according to Geoff Herman, director of state and federal relations for the Maine Municipal Association.

When the circuit-breaker program was eliminated last year, so were the locally funded property tax relief programs that used the state circuit-breaker criteria, he said. Herman said a bill has been submitted to allow local programs to continue, but those communities must find other ways to determine eligibility rather than rely on the state standards.

The South Portland City Council will discuss the potential impact to its program on Monday night.

South Portland residents age 70 or older currently qualify for the local circuit-breaker program as long as they can prove they qualified and received the state benefit.

South Portland budgets about $30,000 a year for the program, which provides up to $400 for qualifying residents. In fiscal year 2012, 62 residents received an average payment of $195, while in fiscal 2013, 151 residents received an average payment of $200.

“Our program will not change – it will only be retooled to address changes as a result of the state’s changes,” South Portland City Manager James Gailey said. Some residents will nevertheless feel the impact of changes at the state level, he said, because they will no longer qualify for the state tax rebates.

Portland’s proposal to start a locally funded tax relief program from scratch was first presented to the council late last month, but former City Councilor John Anton, who chaired the Finance Committee, recommended tabling it until the new year because he is stepping down.

Anton said in an email that the resolution was requested by Councilors David Marshall and Jill Duson. Neither could be reached for comment on Friday.

Portland Mayor Michael Brennan said the council could postpone the proposal until after its Jan. 13 goal-setting workshop.

Brennan said he is reluctant to support any kind of local property tax relief program because it could be a distraction from upcoming state budget battles, including efforts to increase funding for the statewide property tax relief program.

“I’m very cautious about (creating a local program) at this point,” Brennan said. “(Tax) relief should come from the state level before we become too focused at the local level.”

Portland City Councilor Nicholas Mavodones, who chairs the Finance Committee, said it’s unclear whether councilors want to devote staff resources to launch a new program – especially since there hasn’t been a marked increase in the number of constituents complaining about not being able to pay their taxes.

“I haven’t heard from a whole lot of people, but there are always people who struggle to pay their property taxes. It’s a real issue,” he said.

Portland currently has unpaid tax bills dating back to 1989, according to city records. From 2002 to 2012, $754,000 in property taxes went uncollected, including $250,000 in 2012 alone.

City officials on Friday could not provide figures for 2013, nor could they provide annual totals of delinquent tax bills.

When property owners go too long without paying taxes, the city can place a lien and ultimately foreclose on the property.

The city also could not immediately provide information about tax liens and property foreclosures for people behind on their taxes. The city seldom forecloses on homes, said Finance Director Ellen Sanborn.

While the city has no locally funded tax relief program now, Portland was among the first communities to establish one nearly a decade ago.

The Maine Supreme Judicial Court deemed the program unconstitutional because it distributed taxes in an unequal fashion. The court also ruled that Portland didn’t have the authority under Maine law to enact its own program. The Legislature has since passed a law allowing municipalities to offer property tax relief to low-income residents, but Portland has yet to take advantage of that law.

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